Topgolf is merging with Callaway in a deal valued at $2 billion Its how do we take the interest and build connectivity with the Topgolf experience and ultimately make that connection to green grass?. Topgolf now has 38 U.S. and three overseas venues where customers can hit chip-embedded balls at high-tech driving range targets in a lounge-like atmosphere, complete with DJs and drink specials. Dolf Berle will continue to lead the Topgolf business through a transition period following the close of the transaction, at which time he intends to step down to pursue other leadership opportunities. 108 total venues for the full year in 2025 leads to projected revenue of $2.3 billion and $336 million of EBITDA. While the company is expanding, it lacks a large presence in the Northeast and in Southern California, with no current facilities in Los Angeles or San Diego. Follow @topgolf on Instagram, Facebook, Twitter and LinkedIn, or visit the Topgolf Press page for the latest news. press@topgolf.com, Additional Information and Where You Can Find It. Callaway will assume Topgolfs net debt, which is estimated to be $555 million at closing7, resulting in an estimated enterprise value for Topgolf of approximately $2.5 billion. Young people are fickle. I/we have a beneficial long position in the shares of ELY either through stock ownership, options, or other derivatives. The deal ends a 20-year journey as a private company for Topgolf, a concept that started in the United Kingdom to create a new experience in a golf game thats struggled in recent years. All rights reserved. Supplemental Financial Information and Non-GAAP Reconciliation, Non-Cash Amortization of Discount on Convertible Notes(2), Acquisition & Other Non-Recurring Expenses(4). Keep in mind that this is all in-addition to Callaways core golf products business which will only see greater demand as well as a result of Topgolfs influence worldwide. Berle will leave after a transition period and Topgolf will continue to operate from its Dallas headquarters. Due to the constant popularity of Topgolf venues as well as the sport, I believe locations will continue to report exceptional revenues. City Council voted 4-3 to allocate the remaining $6 million in STAR bond revenue to the Topgolf project. Based on industry valuations and the anticipated growth in venues, I believe the Topgolf business alone will be worth at least $4.3 billion by 2025. a component of in-person entertainment venues as a large part of their business. Callaway is issuing about 90M shares to facilitate the merger stock is down about 20% in response. Topgolf is the leading tech-enabled golf entertainment business, with an innovative platform that comprises its groundbreaking open-air venues, revolutionary Toptracer technology and innovative media platform with a differentiated position in eSports. Before that, he was editor-in-chief at the Dallas Business Journal and business editor at the Cleveland Plain Dealer. Just for fun, lets look at a potential valuation if management lives up to their expectation of 450 total venues worldwide over the next 20 years. With the completion of the 9 new venues in 2021, Topgolf will have 70 venues operating for the entirety of 2022. People come back, it is a meaningful repeat business, he said. According to the release, Topgolf is in the early stages of a 10-year unit growth plan. growth prospects of Topgolf makes Callaway one of the most intriguing investment opportunities. Already a subscriber? Sources of data may include, but are not limited to, the BLS, company filings, estimates based on those filings, H1B filings, and other public and private datasets. Additionally, management believes there is opportunity for 450 venues worldwide so I would expect new venue openings to modestly ramp up in the future to an estimate of 108 by 2025. We value who they reach and their diversity.. Upon closing, the combined companys Board of Directors will consist of 13 directors, including three directors appointed by Topgolf shareholders. Topgolf states that about 51 percent of its customers are non-golfers who wind up swinging a club for the first time with their friends at a Topgolf venue, a statistic that has industry insiders brimming with optimism that the company can attract new and younger fans and players to the game, which skews to an older demographic. All of us are looking forward to building new experiences, reaching new audiences and solidifying our digital infrastructure as we connect communities around the globe., In addition to Callaway, the current Topgolf ownership includes Providence Equity Partners, WestRiver Group and Dundon Capital Partners, which added: This is a natural combination that brings together two complementary businesses at the center of one of the most dynamic sports and entertainment experiences available today. Each Topgolf location costs about $20 million to build, and these locations have typically paid for themselves in two years. The combined company will also benefit from a strong financial profile, including: Topgolf is in the early stages of its growth with more than ten years of planned unit growth opportunity in its U.S. venues business and just 2% addressable market penetration in international venues and 1% in the Toptracer Range business. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The companies together will be able to accelerate growth, including through: Together, Callaway and Topgolf create an unrivaled golf and entertainment business, said Chip Brewer, President and Chief Executive Officer of Callaway. What began as a technology that enhanced the game of golf now encompasses a range of unmatched experiences where communities can discover common ground. Accordingly, we have not provided a further reconciliation for long-term forecasted Adjusted EBITDAS to GAAP net income. Now that Callaway is buying Topgolf at a $2 billion valuation, a 50% haircut to their projected IPO price earlier this year, whats the plan? If youd like to retain your premium access and save 20%, you can opt to pay annually at the end of the trial. Callaways reach in the golf world also gives Topgolf an inside track on selling its ball-tracing technology to courses and driving ranges, Berle said. In addition, the Company's independent registered public accounting firm has not audited this information or completed its quarterly review procedures for the quarter ended September 30, 2020 and does not express an opinion or any other form of assurance with respect to these preliminary estimates or their achievability. Dr Pepper flavored Peeps arrive in Texas soon. Itll be fun to see how creative Callaway gets in an attempt to funnel recreational driving range visitors into legitimate customers for their existing brand. Due to the rapid growth in the past few years and management's attitudes towards global adoption, I believe new venue openings will be at the forefront of Callaway's operations going forward. Access to easy-to-read digital editions of weekly issues. Averaging out these 2 years resulted in an EBITDA range of 8.20x to 11.65x. During your trial you will have complete digital access to FT.com with everything in both of our Standard Digital and Premium Digital packages. Continued access to capital is a major priority if Topgolf is to continue its growth trajectory. Attention spans scatter. Its those numbers that have participant-hungry golf courses and the national golf associations all clamoring to draft off Topgolfs success. For a full comparison of Standard and Premium Digital, click here. WebFind company research, competitor information, contact details & financial data for Topgolf International, Inc. of Dallas, TX. At Topgolf, you pay for time at a bay, which you should typically reserve well in advance of your visit if it's a weekend. In addition, the Company has included in the schedules to this release a reconciliation of non-GAAP information to the most directly comparable GAAP information. Topgolf is continuing on its expansion plans in major American cities, as well expanding into Australia, Mexico and Canada through licensing deals. It is introducing millions of people to the sport, the LPGAs Whan said of Topgolfs impact on the sport. Maintaining our same EBITDA multiple range of 8.20x to 12.75x, the Topgolf business could be worth up to $4.3 billion in total value and $23.02 per share by 2025. Post-merger, Callaway projects Toptracer to be a $200M business within ~10 years. Carlsbad, Calif.-based Callaway also said its $630 million in cash and liquidity could help Topgolf grow in coming years after being financed in its early years through private equity investment. Callaway will host a conference call today, October 27th, at 5:30 p.m. Eastern time to discuss this transaction. Along with the announcement, Callaway released a 30-page presentation giving rare insight into Topgolfs existing ownership structure, financials, and projections. With Athletic beers, you can have the full relaxing ritual of drinking a great beer to wind down the day, with your dinner, or day drinking, without derailing the rest of your day or week. Topgolf will continue to operate from its headquarters in Dallas, Texas. Callaway Preliminary Q3 Results and Business Update, Chip Brewer added: The world is rediscovering golf in a way that has led to a record quarter for our company. From a financial perspective, Topgolf did $1.1 billion in revenue last year and is growing at a 30% CAGR since 2017. Topgolf venues overall averaged more than 35,000 customer visits per day last year, with the average customer spending two hours per visit at a venue, according to the company. We also occasionally include links to products and services from merchants of our choice. I wondered if I could even get a bay.. The employee data is based on information from people who have self-reported their past or current employments at Topgolf. Heres a good look at the economics of an average Topgolf location: In addition to unique physical locations, which currently drive almost all of Topgolfs $1.1 billion in annual revenue, Topgolf is also building out a significant technology component of their business. Register for a free SBJ account to unlock one extra article per month. Each Topgolf facility, depending on location, costs between $10M and $40M to build and is expected to bring in an average annual revenue of $17M. The majority of Topgolfs revenue comes from physical locations, but they also have a growing technology business, which Callaway envisions being a significant source of revenue in the future. WebTopgolf: An entertainment complex that provides competitive golfing games for individuals and groups of all ages and skill levels. The part you didn't know? Source: Created by Author with data from Yahoo Finance. Topgolfs venue revenue has now rebounded to about 85% of pre-pandemic levels and all of the companys locations have reopened. Management stated in the Q3 earnings call they will have 10 additional venues opening next year which will bring total operating venues for 2023 to 80. Simply log into Settings & Account and select "Cancel" on the right-hand side. There is a lot of white space. Sometimes we post sponsored content from this account, and it is labeled as such. To supplement the GAAP results, the Company has provided certain non-GAAP financial information as follows: EBITDAS. In the next 10 years, we think that we can double the size of the business and add another 8,000 bays, said Topgolf CEO Dolf Berle. The replay may be accessed through the Internet at this link. The number of shares to be issued is based upon an implied equity value of Topgolf of approximately $2 billion, including the 14% already owned by Callaway. This combination unites proven leaders with a shared passion for delivering exceptional golf experiences for all from elite touring professionals to new and aspiring entrants to the game. Tech entrepreneur Ryan Smith purchased a majority stake in the Utah Jazz yesterday, which values the team at $1.6 billion. Why did Callaway buy Topgolf? What is exciting is the belief that they can be LPGA viewers or on-site fans. What started as a simple idea to enhance the game of golf has grown into a movement where people from all walks of life connect at the intersection of technology and sports entertainment. and other data for a number of reasons, such as keeping FT Sites reliable and secure, Topgolf has achieved rapid growth and strong customer engagement since its founding in 2000, driven by several platforms, including: Since its inception, Topgolf has created an innovative, tech-inspired twist on the golf driving range experience, turning it into a global entertainment and sports movement. Churchill Downs has been home to some of the most incredible moments in sports history. A long-term forecast of each of these line items is not available without unreasonable efforts due to the variability of these items and the inability to predict them with certainty. Webguidance to $424 to $430 million as golf equipment and apparel revenue and Topgolf venue profitability continue to outperform prior expectations Earnings Per Share - diluted $0.14 $0.61 $(0.47) $1.01 $0.99 $0.02 one additional planned location expected to open in the fourth quarter of 2021 Drive Shack, backed by TaylorMade, this spring is set to debut its first golf/entertainment facility in Orlando with a three-story driving range that, like Topgolf, will offer a bar and restaurant experience. Founded in 2000, Topgolf has reinvented the concept of golfs antiquated driving range to attract both golf aficionados and novices alike, turning it into a destination venue for people to play technology-enabled golf games accompanied by music, food, and drinks. The deal is expected to close in early 2021. 3 Morning Consult Polling, Published July 21, 2020 I have no business relationship with any company whose stock is mentioned in this article. If you do nothing, you will be auto-enrolled in our premium digital monthly subscription plan and retain complete access for 65 per month. Throughout trading in 2018 and 2019, the industry average EBITDA multiple ranged from 7.82x to 10.59x and 8.59x to 12.72x, respectively. As part of the agreement, Callaway will issue 90 million shares of its common stock to Topgolf shareholders. 2 National Golf Foundation, August Rounds Play, Published September 2020 ICYMI, I wrote a thread last night breaking down his incredible entrepreneurial journey. You have 2 All Access articles remaining this month. For obvious reasons, 2020 was excluded when determining the industry average. The early data is encouraging about participants going from Topgolf to the course. Brian Lynch Callaway and Topgolf both delivered strong financial results immediately before the COVID pandemic and have since recovered ahead of expectations. However, the Company has not completed its financial closing procedures for the three months ended September 30, 2020, and its actual results could vary materially from these preliminary estimates. Both companies are well positioned to take advantage of both short- and long-term changes in consumer behavior as a result of the pandemic. 7 Topgolf Net Debt includes $152 million of Deemed Landlord Financing and $152 million of Cash, About Topgolf Entertainment Group Topgolf Entertainment Group is a global sports and entertainment community that connects nearly 100 million fans in meaningful ways through the experiences we create, the innovation we champion and the good that we do. Topgolf garnered an investment from Callaway in 2006 and expanded to the United States, now the primary market for the company. Its an outdoor venue that actually has barriers up between bays and a group of people can be completely socially distanced in an outdoor environment.. In that time, Topgolfs value grew to equal that of Callaway, a dominant name in golf equipment and apparel. (3) Represents non-recurring costs associated with the Company's transition to its new North America Distribution Center, implementation of new IT systems for Jack Wolfskin, and $0.7 million of severance related to the Company's cost reduction initiatives. Non-GAAP Reconciliation and Supplemental Financial Information, Non-recurring and non-cash charges, before taxes(1). More than two decades of archival stories, profiles, research and data. The proposed expansion of the non-essential goods tax, which would see luxury good items taxed more, would generate st least P12.4 billion in annual revenue that could be funneled into supporting the local creative industry, Albay 2nd District Joey Salceda said on Wednesday, Jan. 18. Additionally, EBITDAS excludes these same line items from forecasted net income. For more information please visit www.callawaygolf.com, www.odysseygolf.com, www.OGIO.com, www.travismathew.com, and www.jack-wolfskin.com. 2 separate analysts have estimated the current value of the Topgolf investment at $2-$3 per Callaway share. INVESTORS AND STOCKHOLDERS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT/PROSPECTUS/ CONSENT SOLICITATION, AND OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT CALLAWAY GOLF COMPANY, TOPGOLF INTERNATIONAL, INC., THE PROPOSED TRANSACTION AND RELATED MATTERS. Topgolf).. Another literal connective effort is Topgolfs latest plan to build a new venue on the site of a West Palm Beach, Fla., public golf course. The acquisition of Topgolf for $2.6 billion redefined Callaway (ELY) as a golf entertainment company. Kyle Arnold. Their CEOs explain the strat offers FT membership to read for free. During the course of the preparation of the Company's consolidated financial statements and related notes as of and for the three months ended September 30, 2020, the Company and its auditors may identify items that would require the Company to make material adjustments to the preliminary estimates presented above. Get the latest headlines delivered to your inbox every weekday. Overhead can also run high, as Topgolf has about 15,000 full and part-time employees overall, which leads to staffing and training challenges as the company manages growth while focusing on providing a consistent and engaging fan experience. The GAAP results contained in this press release have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). Topgolf began looking at an initial public offering in 2019. (2) Represents the non-cash amortization of the debt discount on the convertible notes issued in May 2020. Its an all stock deal which gives Topgolf an implied equity value of ~$2 billion. The challenge is balancing Topgolfs position as a young, hip, social scene geared to drinking, eating and meeting people with the golf groups interest in growing the game. 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